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U.S. Court Approves Transocean's $1 Billion Civil Settlement on Oil Spill

Source: Dow Jones

Posted on 20 Feb 2013 by Neilson

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Transocean settlement approvedA U.S. court in New Orleans approved on Tuesday a $1 billion civil settlement between drilling contractor Transocean Ltd . (RIG) and the Department of Justice over the Deepwater Horizon spill.

Transocean, which owned the rig that exploded in 2010 killing 11 and unleashing a major oil spill in the U.S. Gulf of Mexico, agreed to pay $1 billion to settle Clean Water Act penalty claims, a figure that the Department of Justice called a record amount.

The company also agreed to beef up its operational safety and emergency response capacities in drilling rigs operating in the U.S.

The agreement, approved by federal judge Carl Barbier, was entered last January, along with a $400 million settlement of criminal fines and penalties related to the incident. Another U.S. judge approved the settlement of criminal fines last week.

BP PLC (BP), which leased Transocean's Deepwater Horizon rig, has also reached a settlement with the Department of Justice over criminal fines, but is slated to begin trial for civil penalties that could amount to billions of dollars. The company said Tuesday it would defend itself vigorously in court, and said that a government estimate that 4.9 million barrels of oil were spilled in the Gulf during the Deepwater Horizon incident is overstated by at least 20%.

BP added that it expects to be fined less than the statutory maximum under the Clean Water Act of $1,100 per barrel spilled, or $4,300 per barrel if the company were to be proved grossly negligent in its actions prior to the spill. "We firmly believe we were not grossly negligent," BP said.